Life Income Gifts
A life income gift is created when you irrevocably transfer property in exchange for which you and/or others you designate receive income, usually for life. While there are several different types of life income gifts they all share the following common advantages:
- an immediate income tax deduction;
- estate tax savings;
- avoidance of all or part of the capital gains taxes otherwise due upon the sale of an appreciated asset;
- an attractive income stream;
- the satisfaction of having made a "gift of a lifetime" to Ouachita.
Three types of life income gifts offered by Ouachita are Charitable Gift Annuities, Charitable Remainder Trusts and Charitable Lead Trusts.
Charitable Gift Annuities
A gift annuity is a contract between you and Ouachita that guarantees you and/or other designees an income stream for life. The income stream can begin as soon as the gift is completed. However, if you don't currently need the income or want a larger income tax deduction, you may elect to defer the income until a future date. At the end of the designated lifetimes, the remainder will be used by Ouachita in accordance with the donor's wishes.
Because the nature of the gift annuity allows for a fixed payment amount, gift annuities are appropriate for donors who want to make a significant gift to Ouachita, but are concerned with maintaining a life income stream that can be relied upon.
Charitable Remainder Trusts
In a charitable remainder trust, the donor makes an irrevocable contribution of cash, securities, or real estate to a certain type of trust. In exchange, the trust will pay you and/or other designees an income stream for life, or for a period not to exceed twenty years. At the end of the trust, the remainder will be used by Ouachita in accordance with the donor's wishes. There are two types of Charitable Remainder Trusts that Ouachita offers: Charitable Remainder Unitrust (CRUT) and Charitable Remainder Annuity Trust (CRAT).
Charitable Lead Trusts
A Charitable Lead Trust is accomplished when you irrevocably transfer property to a trust that presently pays an income stream to Ouachita for a period of years or for the lifetime of named individuals, or for a combination of the two, with the remainder interest of the trust passing to any non-charitable beneficiary you choose. Usually, the non-charitable beneficiary is a younger family member.
There are different kinds of charitable lead trusts that a donor can establish. Two of these trusts, charitable lead annuity trust and the charitable lead unitrust, will provide an income tax deduction if properly established.
All charitable lead trusts provide an estate or gift tax deduction as well. Charitable lead trusts are often used to transfer significant assets to family members at a future date with the intent of avoiding large estate or gift tax consequences. Charitable lead trusts may also be appropriate for reducing income taxes in years that you might have unusually high income that places you in a higher tax bracket.
When considering making an estate gift, we urge you to seek the advice of your financial advisor or contact the Development Office.